How do I set up dual monitor wallpaper (Ubuntu/NVIDIA)?

You can't. Lucid Lynx (your Ubuntu version) has lost this capability, and a bug has been filed.

Update:

Seems like there is a temporary fix already:

1. Set desired wallpaper as you usually do
2. Execute this command in the console:
   gconftool-2 --set "/desktop/gnome/background/picture_options" --type string "spanned"
3. Do the dance

Update for future searchers: As of Ubuntu 10.10 (Maverick), you now have the "Span" option in the Appearance/Wallpaper Control Panel. For best results, be sure to create your wallpaper to be the exact pixels of your displays combined.

E.g. for two 1280x1024 monitors, use a wallpaper with size 2560 x 1024 -- otherwise it will scale and center your wallpaper to fit.